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Hong Kong and member states of the European Free Trade Association sign Free Trade Agreement

21 June 2011

Hong Kong and member states of the European Free Trade Association sign Free Trade Agreement

Hong Kong (HKSAR) — Hong Kong and the member states of the European Free Trade Association (EFTA), namely Iceland, Liechtenstein, Norway and Switzerland, signed a Free Trade Agreement (the Agreement) today (June 21) in Liechtenstein, marking an important milestone in trade relations between the two sides.

The Acting Secretary for Commerce and Economic Development, Mr Gregory So, and the EFTA ministers signed the Agreement in Schaan, Liechtenstein, today. The ministers attending the signing ceremony on the EFTA side were the Minister of Foreign Affairs, Liechtenstein, Dr Aurelia Frick; the Minister of Foreign Affairs and External Trade, Iceland, Mr Ossur Skarphedinsson; the State Secretary of the Ministry of Trade and Industry, Norway, Ms Rikke Lind; and the Federal Councillor and Head of the Federal Department of Economic Affairs, Switzerland, Mr Johann N Schneider-Ammann.

This Agreement is Hong Kong’s first free trade agreement (FTA) with the European economies.

It covers trade in services and goods as well as investment, and other trade-related issues such as protection of intellectual property. It is fully consistent with the provisions of the World Trade Organization.

Speaking at the signing ceremony, Mr So noted that the EFTA states are important trading partners of Hong Kong. Both sides, being strong advocates of free markets, and free and open trade and investment, share the same commitment and strong support for trade and investment liberalisation and facilitation.

"The Agreement is comprehensive, of high quality, and will take our trade and investment ties to new heights.

It will act as a new platform to help pave the way for further economic growth," Mr So said.

"Traders and investors of both sides can enjoy preferential access to our respective markets under the Agreement. We look forward to businessmen making good use of the opportunities offered under the Agreement, which is our first-ever free trade agreement with European economies, to explore and expand their business in Northern and Western Europe," he added.

The following are the key features of the Agreement:

 On trade in services, the Agreement will provide Hong Kong service providers and the services they provide with better business opportunities and legal certainty in market access and non-discriminatory treatment in the EFTA states’ markets in a wide range of service sectors.

These encompass areas in which Hong Kong has traditional strengths, such as telecommunications services, financial services, logistics services including maritime transport services, audiovisual services and various professional and business services. They also include areas identified with potential for further development in Hong Kong, namely education services, environmental services, medical services, innovation and technology, cultural and creative industries and testing and certification services.

 On movement of business persons, without compromising legitimate immigration control, business visitors, intra-corporate transferees, installers or maintainers, contractual service suppliers and independent professionals of Hong Kong will be granted temporary entry into relevant EFTA states in accordance with the commitments of individual EFTA states.

 On trade in goods, all industrial products as well as fish and certain marine products of Hong Kong origin can enjoy duty-free entry into the EFTA states. Tariff-free or tariff concessions are accorded to Hong Kong’s agricultural products by the EFTA states.

For products originating in the EFTA states, Hong Kong commits to granting its current tariff-free regime.

 On investment, the Agreement provides investors in non-service sectors with legal certainty on national treatment, facilitates their temporary entry and stay in Hong Kong and the EFTA states, and provides them with safeguards on movement of capital and other aspects. These complement similar provisions for service sectors.

Overall, the Agreement will enhance business opportunities for Hong Kong and increase trade and investment flows, thereby benefiting Hong Kong’s economy and the city’s traders.

The Agreement is expected to come into force around mid-2012, subject to the completion of domestic procedures of both sides.

Total bilateral merchandise trade between Hong Kong and the EFTA states amounted to about HK$76 billion in 2010.

The average annual growth rate in bilateral trade between Hong Kong and the EFTA states was 13.8 per cent from 2006 to 2010. In 2010, major domestic export items to the EFTA states were jewellery, silver and platinum, and concentrates, waste and scrap precious metals (other than gold). Major import items from the EFTA states included watches and clocks, silver and platinum, and jewellery.

Total bilateral trade in services between Hong Kong and the EFTA states amounted to about HK$10 billion in 2009.

The average annual growth rate for total trade in services was 8.2 per cent from 2005 to 2009. In 2009, major service trades between Hong Kong and the EFTA states included transportation services, merchanting and other trade-related services, and financial services.

Details of the Agreement, including its full text, will be uploaded to the Trade and Industry Department’s website:

 source: HKSAR